Wage gaps, Depressions and war

CAPE TOWN (April 24). South Africa may not have the largest wage and welfare gap between chief executives and the average pay of workers. That distinction, says Richard Trumka, president of the major labour federation in the United States, the AFL-CIO, belongs to the USA.

This week the AFL-CIO released its 2012 Executive PayWatch website, “CEO Pay and the 99%” that reveals the vast gap between the wealthiest 1 percent of the country and the other 99 percent. Chief executives of the top 500 companies in the US are now paid 380 times what the average “blue collar” worker earns, says the federation. In 1980, this gap was just 42 times greater.

According to AFL-CIO calculations, during the claimed economic recovery of 2010, the average increase in pay for the top 1 percent of the population (some 3.1 million people)was 11.6 percent, while the average for the 99 percent grew by just 0.2 percent. In an e-mail to all members and contacts globally, Trumka noted the average level of CEO pay in the S&P 500 Index last year increased by 13.9 percent, to $12.94 million (R93 million).

The federation’s website also points to evidence that the average household income of the very richest of the rich — the top 0.01 per cent of the population — is $23 846 950 or about R170 million a year. It also makes a stark comparison between the global economic slump known as the Great Depression of the 1930s and the ongoing crisis that began in 2007.

At the start of both these crises, the income of the top 1 percent of the population peaked. If the comparison is accurate, it is worrying since it is now broadly agreed that it was only the massive destruction and loss of life of World War 2 that dragged the world out of that first crash.